To me, as your Buyer’s Agent, there is nothing more critical than your Due Diligence Period. Remember that this period starts the moment all parties have signed the contract and ends at 5:00 p.m. on whatever Due Diligence Date all parties agree to. I typically ask for 5 weeks to complete our Due Diligence, or “Research of the Home”. I have seen contracts where the buyers have agreed to as little as 3 weeks.
I want us to have all of the answers to our questions before the end of this period and completing the loan process, in particular, is one of the items that will take the longest. Don’t forget that if you back out of the contract after 5:00 p.m. on the Due Diligence Date, you forfeit your Earnest Money, in addition to your Due Diligence Fee. The worst thing that could happen would be to find out after your Earnest Money is committed that you do not qualify for the loan you need after all. Therefore, we need to be sure that we give your lender and, in fact, all of our service providers in this process, adequate time to get the answers back to us that we need in order to make an informed decision as to whether or not you will complete the purchase of this home.
Here is a typical list of what you can expect to need to have done during your Due Diligence Period:
- If needed, Consult with an Accountant, CPA or Tax Advisor
- Have an Appraisal done
- Have a Title Search done
- Obtain a Flood Elevation Certificate
- Have Inspections Completed: Home, Radon, Termite, Septic, Well/Water (if applicable), etc.
- Obtain Mortgage Loan Approval
- Obtain a Property Insurance Binder… Is the home insurable? Are you insurable?
- Obtain a Survey
As you can see, we have a great deal to accomplish in the limited amount of time we have given ourselves. The results of this research will make your decision easier when the time comes.
Next Time: What Does All of this Cost?